January 7, 2013

"Yes, absolutely. He will, after all, be faced with a choice between two alternatives: one that’s silly but benign, the other that’s equally silly but both vile and disastrous. The decision should be obvious."

It's strange that it's come to this, but I don't believe the President of the United States would choose to do something that will strike the people as so bizarre, even if he feels capable of articulating the legal theory with a straight face. The President must maintain the people's trust and confidence. He must be comprehensible as normal, sound, and sane to ordinary folks.

" the GOP would hold the full faith and credit of the United States hostage"

Thanks to our visiting and obedient lefties you don't even have to visit the left side of the internet to hear the talking points like the distant call of a pack of crows realizing they've eaten their cornfield barren and signalling the need to find the next. I can't tell one "caw" from the next. It's a caw-caw-phoney!

" in 1945, President Harry Truman printed a one trillion-dollar bill (with his photo on it) to help reconstruct post-war Europe. He handed the bill over to Montgomery Burns to transport to the Europeans. However, the money never arrived and the FBI suspects Burns still has the money with him. As satellite photography can only confirm that the trillion-dollar bill is not on the roof of Burns's home, Homer is sent in to investigate..."

"So Mr. Krugman, where do we get the trillion dollars to buy this platinum?"

Ah, but there's the beauty that is the mind of Nobel laureate Krugman. He knows you don't need the trillion dollars. He believes (correctly) that the U.S. can always avoid defaulting on debt by printing as much money as it needs to meet its obligations. He believes (incorrectly) that this is "benign." Or else he knows it is not benign, but is counting on his readers to be too stupid to know it.

Krugman's just being typically childish. The day the government tried this stunt would be the day the Treasury stopped being able to get anyone to loan it money.

It doesn't even matter if $1 trillion in funny money isn't inflationary (as Krugman weirdly claims). What matters is that there's no upper limit; under Krugman's theory the SecTreas could print a $1 septillion coin if he wanted to. Nobody is going to invest a substantial sum in debt when the value of that debt is literally dependent on the whim of a single political appointee.

THere should be a movie called Obamas Trillions. And the premise is Obama gets a trillion dollar fortune, but first he has to spend his billions on things that give him no assets whatsoever.So he could run for Office and tell voters to vote for None Of the Above. He can buy the most expensive stamp and then use on a letter he will send.And of course he can have govt create a coin made out of platinum which he says will be worth a trillion dollars. But then he'll buy a cup of coffee with it.

The coin would be as worthless as the coin in my proposed movie.

Why not get the Franklin Mint to come up with commerative platinum coins that are models of the real platinum coin and everyday people can buy them for 19.95 from an infomercial. I'm thinking on the face of the coin they should put a big pile of shit. And on the back could be Obama on the toilet.

I have a lot of monopoly money at home. But no trillion dollar bills. Something tells me it wouldn't work in a monopoly game either.But Obama bucks, I like the soudn of that. We could have a trillion dollar coin. ANd a bazillion dollar coin. And a gazillion trillion billion million dollar coin. I Wonder if China has change of a gazillion trillion billion dollars?

Definitely sofa king. And I'm sure that Obama wiilEnact gun control through executive order rather than byTrying toLegislate it or amending the constitution.You kno what though? I'mOk with it, do long as repubs get to live by the same rulesWhen they're elected. Overturning the right to an avortion through fiat and executive order. So sime so effective.

Making Keynesian economic Ideas hate speech with those found guilty getting fired From any job they might hold ever unless its on gay porn.. Or a firing squad. Still not sure yet. Maybe we can simply shit in theirFace and force them to eat it, like Ron Burgundy was forced to eat cat poo after insulting San Diego.

It does not have to be a platinum coin. They can also print it on a piece of paper and have the Secretary of the Treasury and the Treasurer of the United States sign it, and it would be just as good.The question is if anyone would accept it and also what folks that matter around the world would begin to think about our 1 through100 dollar bills.

The legal profession seems to have some people in it that thinks any practice there is not a specific written statute against is "legal" and therefore must be accepted by us all, but this is not so.

It does not have to be a platinum coin. They can also print it on a piece of paper and have the Secretary of the Treasury and the Treasurer of the United States sign it, and it would be just as good.

Functionally, it's like printing trillion dollar bills, but they can't print trillion dollar bills because Congress won't authorize it. Or maybe it's the Fed who won't authorize it. Anyway, the reason it has to be a platinum coin is that there's some kind of loophole that lets the Executive branch mint platinum coins in any denomination they want without cooperating with anyone else.

Really? He got re-elected with Big Bird, free condoms, diasters in Benghazi, lies (you can stay with your doctors, lower medical costs) and more lies (nobody is going to take your guns away). Do people trust him, have confidence in him?

I think Maguro is right that it taes Congressional authorization to print "greenbacks," but I still think the platinum is just for show. Probably a hangover from the original Constitution when the value of coins really depended on the weight of precious metal in them.

Devalue capital and labor through perpetual trillion dollar account deficits, or devalue capital and labor through a selective redistribution scheme of a new currency. Will he mint a new trillion dollar platinum coin every year to devalue capital and labor until citizens serve at his pleasure?

Fist, Krugman got his Nobel the same way Obama did.. in a cracker jack box. And if President Farce Obama want's to make his Administration a bigger failure he can just go ahead. Hell why not? Sixteen trillion, seventeen trillion, a trillion here a trillion there and soon you will have some real money.

And when inflation gets as high as it is in Argentina and the riots begin I sure hope Obama has taken up the guns as he says he will cause if not it's 1776 all over again (as has been said this night by another gent.)

I think economists are pretty clear about how printing money only devalues currency. If you do a google search for "why don't we just print money to pay off our debt?" You get plenty of pages explaining how this doesn't actually work and why its a bad idea.

And yet Krugman is supposedly a Nobel prize winning economist suggesting absurd gimmicks rather than simply addressing real solutions like dealing with spending.

No wonder he is all for Keynesian economics. If that fails he wans to print or coin trillion dollar coins. Anything but address spending.His next idea is a game of craps.

I find it funny that machine and other libs support Obama at all. And ignore that minting or printing money, like Idiot Krugman advises, is a massive tax on the poor. But, who cares besides Republicans. We just live in the real world.

The Obama fairy world ... where Krugman imagines his idiot fantasies ... Obama imagines he could have passed College Algebra if the GTA would just understand how much smarter Obama was then her ... machine imagines that being sane is like hostage taking ... that is the world we all should live in.

The idea that its the GOP "holding the full faith and credit of the US hostage" when the Democrats have intentionally refused to pass a budget for more than four years is the kind of utterly insane nonsense that ought to make one swear off meth.

It is incredible to me that Krugman, an economist and all that, would talk of "printing" a coin.

In fact, I am so certain that he knows the difference between "printing" and "coining" that I am sure he is doing it on purpose for some slippery reason I do not understand.

The founders were very leery of giving government to the power to "print" money and they did not do it. Memories of the disaster of paper money during the Revolution were fresh in their mind. "Not worth a Continental Dollar" is a phrase we still hear occasionally today.

We had to go through the Charade of the Federal Reserve System where, technically, privately owned banks (Federal Reserve Banks) issue the paper money under the supervision of the govt Federal Reserve Board.

From Article 1, Section 8 of the Constitution:

5: [The Congress shall have Power] To coin Money, regulate the Value thereof, and of foreign Coin, and fix the Standard of Weights and Measures;

6: To provide for the Punishment of counterfeiting the Securities and current Coin of the United States;

While the Sec Treasury may have the legal authority to issue commemorative coins, I wonder if they have the power to make them "legal tender"?

I think the result (and the mechanism for its occurrence) of printing more money is well-known and very easily understood, even by people who know almost nothing about economics. Krugman tells us that we can't default, we can just print the money we need. He is pointing out that the U.S. never has to default. This is correct. It is also correct that leaping from the Empire State Building (with no lifesaving device) will not kill you; the sudden stop will. The "sudden stop" in Krugman's scenario is an experiment that has already been done more than once. It is reproducible, and there is every reason to think that we will get the same result.

And does anyone doubt that credit rating agencies take into account the possibility of expanding the money supply when they grade the credit worthiness of a sovereign?

Congress has the power to "coin" money. Coining is a specific metal working process, not a printing process.

Congress can also fix the value thereof. Sounds like Congress would be the ones to set the value on the Platinum coins, not the Sec Treasury.

Of course, the Repos in COngress are so toothless that they would not do anything. And if they did challenge the president, what could they do? Obie seems intent on doing whatever he wants without regard to law or COnstitution.

@ Crimso said, "Ah, but there's the beauty that is the mind of Nobel laureate Krugman. He knows you don't need the trillion dollars. He believes (correctly) that the U.S. can always avoid defaulting on debt by printing as much money as it needs to meet its obligations. He believes (incorrectly) that this is "benign." Or else he knows it is not benign, but is counting on his readers to be too stupid to know it."

Yes, Mr. Crimso, just so. Thank you for noticing that a "trillion-dollar platinum coin" is not worth a trillion dollars. It's funny money, all around. Sadly for America, Bernanke thinks so, too. Why, the U.S. will never default because it can borrow money from itself -- at "no cost!" said he.

We can mint any new coin we like and denominate it a trillion. Why mint it in costly platinum when it can just as easily be stamped on play-doh? Or wood? (Although platinum does sound more dignified and Cambridge-like; it suggests the coin might actually hold intrinsic value).

So let us raise this platinum-coin money-creation concept far and wide, with everyone who will listen. It is not at all new. But having racked my brain, I can think of no other way to educate the populous that the Federal Reserve is already printing funny money and devaluing our savings (and pensions) by the minute. It is so in-your-face, blatantly inflationary, that by George, they might just get it.

The only difference between this coin and the Fed's current lending practices is . . . the Treasury needs permission from Congress to borrow printed money from the Fed, whereas -- so goes the argument -- the Treasury has unlimited access to "money" free from Congressional constraint if it is "minted" rather than printed. The difference is quite stark, of course, and clear for all to see. GLURP.

Dare I hope the bond market will set us straight, dreadful and painful though it will be, before we debase ourselves into oblivion? Or should I just give up now and make a cup of tea?

I hear my tea kettle whistling.

(P.S. apologies to all where I've conflated the Fed with the Treas. or the Prez.; here's a link that should clear it all up quite nicely.) http://www.pbs.org/newshour/businessdesk/2012/08/does-the-fed-feed-the-treasury.html

Forget the platinum coin. Just build a wooden box,seal it, and have Obama issue an Executive Order claiming that it is filled with magic air worth $1 trillion dollars but cautioning that if the box is opened, the air will immediatly lose its magical powers.

I'll take another six years of Nixon and double your Watergate's before having another six months of Zero if given the choice.

Machine is of on a rant about full faith and credit. Legalize the use of other currencies in this country to satisfy debts and he will see how much full faith and credit the Swiss Frank has. Friends for the comming inflation put your money in hard asset backed investments.

I don't think that an executive order or the like is going to work here for Obama, though I wouldn't put it past him for trying. Yes, the Republicans would be totally unglued, but I don't see this getting through the courts either, for the reasons given by others above. It just so contravenes the express intent of the Constitution, and esp. since it bypasses the Federal Reserve, which was the way that Congress was bypassed in the first place. And, the problem with the Republicans is that they control the House (which is why Obama would be doing this in the first place), and that is where budget bills start. This would, I think, cede them the high ground, allowing them to essentially shut down the government in order to impose their spending cuts.

I've noticed the usual shills haven't popped up to defend this one. Perhaps deep in their progressive lizard brains they know this is an incredibly foolish idea.Or they're waiting for talking points.You know. They want all the facts before they make up their minds.And yes, POGO. This is what dictators do.

It's strange that it's come to this, but I don't believe the President of the United States would choose to do something that will strike the people as so bizarre, even if he feels capable of articulating the legal theory with a straight face. The President must maintain the people's trust and confidence. He must be comprehensible as normal, sound, and sane to ordinary folks.

Can't tell if trolling, or serious. Where have you been for the last four years?

machine said...So it's agreed: the US should not pay the checks it has already written.

Nice..

When these thoughts enter your head and you feel compelled to share them with the rest of the world..........stop and think about it for a full minute and then don't do anything.Trust me when I say this. It will prevent you from outing yourself as a complete and utter idiot.

"So it's agreed: the US should not pay the checks it has already written."

I don't "pay" checks I've written, the bank does. When I write the check AND THEN SEND IT TO THE RECIPIENT, assuming the bank does its job and assuming I have the money in my account, the check is "paid."

But that's not what we're talking about. We're talking about never writing the check in the first place. For example, if I have to make a mortgage payment, but don't, I have not failed to "pay the check" I've "already written."

Of course, an even better idea would be to not have the debt requiring the writing of the checks in the first place. That is the root of the problem being discussed here, and addressing it is the only actual solution.

"Just build a wooden box,seal it, and have Obama issue an Executive Order claiming that it is filled with magic air worth $1 trillion dollars but cautioning that if the box is opened, the air will immediatly lose its magical powers."

You may have just hit upon the perfect solution, allowing us to have our cake and eat it too. We'll actually create the currency, and then set up a mechanism in the box that will cause destruction of the currency at a random time. Until the box is opened, the currency is both intact (so we can use it) and destroyed (so no inflation). Call it “Schrödinger’s trillion.”

Unless this Trillion dollar coin weighs around 20,250 tons, it is just more fiat currency.

Better idea, why not just build 4 more Nimitz class carriers out of platinum! At roughly 100,000 tons each, they would each be worth about 5T. Then Obama can have the "extra" 3.5T to play with these last 4 years.

I so badly want Obama to do this. Though there is little evidence, I retain the belief that among a scant few of the idiots that support him, there is a slight familiarity with reality. Were he to coin a $1,000,000,000,000 platinum piece, undoubtedly with his image upon it, even they might see what a joke he is.

" I don’t believe the President of the United States would choose to do something that will strike the people as so bizarre, even if he feels capable of articulating the legal theory with a straight face. The President must maintain the people’s trust and confidence. He must be comprehensible as normal, sound, and sane to ordinary folks"

" I don’t believe the President of the United States would choose to do something that will strike the people as so bizarre, even if he feels capable of articulating the legal theory with a straight face. The President must maintain the people’s trust and confidence. He must be comprehensible as normal, sound, and sane to ordinary folks"

Seems like a waste of good platinum to me. But I'll bet there are thousands of those lovely Obama "Historic Victory" commemorative plates, just gathering dust in a warehouse somewhere. They were priceless family heirlooms in 2008, and now that Obama has had TWO historic victories they've gotta be worth at least a couple billion dollars each! Our deeply divided country needs the inspiration of his confident smile and kind eyes, now more than ever.

Not only is the debt gone forever, just imagine all those loyal Obama supporters sitting at home, unemployed, suddenly discovering they're billionaires! It's the right thing to do.

"and most didn't believe the GOP would hold the full faith and credit of the United States hostage either..."

They are not holding it hostage. They are acting as a Kevlar vest, trying to protect its vital organs from the fusillade of bullets the Democrats are firing at it with their (high capacity magazine) economic assault rifles. When the full faith and credit of the United States is bleeding red all over the floor it doesn't exactly inspire confidence.

I read somewhere that Krugman was ask to be the new Sec. of Treasury, but wisely turned it down. I suspect he is afraid to be officially part of this administration, especially when this economy built on Federal Reserve sand collapses and the hanging begins. Isn't that how banana republics usually end?

He will order the coin made because he has no risk from any fallout. Ordinary people already know that he is not "normal, sound, and sane", while his supporters treat his every action as delivered from God.

He will order the coin made because he has no risk from any fallout. Ordinary people already know that he is not "normal, sound, and sane", while his supporters treat his every action as delivered from God.

I don't think the debt problem is as bad as it looks because the federal balance sheet does not include the real estate and mineral wealth the federal government owns. I don't know how bad the debt problem is because I have never seen a reasonable estimate of that value.

The balance sheet of a private person or company would include these things.

"So it's agreed: the US should not pay the checks it has already written."

This nonsense comes up every time we discuss fiscal matters. The Left conflates "paying the checks we've already written" with "writing more checks". They do something similar with every attempt to reform Social Security: If you propose raising the retirement age for people who are now under 50, they pretend that you advocate changing the deal for someone who files for his SS benefits tomorrow.

The platinum coin nonsense is no crazier than having the fed buy 80%+ of all treasuries so as to keep the interest rate far below it's natural/market rate, which is exactly what is going on now. It is like watching little sub-normal children play with matches, automatic weapons, prostitutes and narcotics all at once.

actually the law in question is pretty clear ... The Sec Treas can have a 1 trillion dollar coin minted but he would have to buy 1 trillion dollars of platinum first and have the coin struck with that metal ... the law directs that the coins have a value of the bullion contained with some minor markups for minting amd handling ...so first he would have to find a spare trillion in the couch cushions, buy the bullion and then strike the coin which would weigh about 638 million ounces ... all legal ...

And when this harebrained scheme is launched, how exactly does Mr. Krugman think the bond market will react. At that point, the legal legitimacy of the USD will be dubious, at best and the Fed's credibility will be shot. But, hey, at least they manage to increase debt without having to negotiate with Republicans.

President Obama can try this. Then House Republicans can refuse to pass a continuing resolution, and the government can shut down.

Then they can refuse to pass a budget until Congress passes a law, and Obama signs it, that blocks the coin trick, and repudiates any existing coins.

One of the major mental deficiencies of the Left is they simply can't wrap their heads around the idea that the other guy gets to play just as rough as they play. They want to refuse to bargain in good faith, and play hardball? Fine. So do we.

As the party of government dependency, they have a lot more to lose than we do.

"The President must maintain the people's trust and confidence. He must be comprehensible as normal, sound, and sane to ordinary folks."

There are unstated assumptions in your choice of construction, Professor.

I would challenge you to check your premises. Simply because you believe that the only prudent path for the President to take is the one you outline, that does not in any way imply that he MUST do so.

There is certainly no requirement that he do so. Presidents have done imprudent things before, and it would hardly be the first time that a President took an action that some subsection of the population considered far beyond the pale.

The current economic wunderkind contingent is enamored of something that they call Modern Monetary Theory. They assert that the old Quantity Theory of Money is flawed, and insist that their new model accurately describes how money "really works" in modern economies.

They are stone-cold serious when they assert their belief that taking this action, or even ones far larger, would not have an inflationary effect. In their view, it is only spending (appropriations) when at full employment that can have an inflationary effect.

This maneuver, or the jaw-dropping version where someone is seriously advocating making a single coin one time denominated at 60 trillion dollars, simply changes the balance available at the Treasury, and since the US is a sovereign issuer of currency, they have the ability to manufacture whatever amount of currency they like out of thin air. That's the nature of fiat currency.

They assert that no matter how high the balance is at the Treasury, the only potential for economic effects would come from the incremental spending as Congress appropriates additional funds and spends them... but that spending in excess of revenues is not inflationary now because we are at less that full employment.

I would sleep better if I were simply making this up as a lark... but I'm not. These folks are real, and are serious. I fear for the future of our nation if they are believed in Washington long enough to let a djinn like this out of the bottle.

The problem with the economy is really that there is not enough money that doesn't have associated with it private debt. If there were more currency or coinage, then the government could wisely discourage lending, which excess lending is what caused the collapse of the economy to begin with.

The conversation about government debt in the media is remarkably stupid. For instance, Why is it rarely pointed out that money in the strict sense is backed almost exclusively by government debt? Were there no government debt, there would be practically no money (except to the extent it is backed by coins, etc.) Government issued debt and money does not have associated with it private debt. Money that banks create out of thin air in checking accounts, etc., does have associated with it private debt. As long as government created debt and money is small compared with money that the banking system as a whole creates, the total amount of money people have in the broad sense will always be near the amount of debt people have and our citizens on average will be bad off. This is just simple accounting identity.

Vastly increasing the money that the government creates (relative to what the commercial banking system creates) would be a fine thing as long as the money is given or spent so as to end up in the economy. Obviously if the money is spent, it would be preferable if it were spent on something useful, but that is not the main issue.

The wrongly sophisticated tend to think that our economic problems are complicated and that there could be no quick remarkably easy fix like the government printing and distributing more money (backed by trillion dollar coins, say), while not allowing banks to create more money and restricting lending. But they are wrong (assuming the method would be legal, which I have no knowledge about)--that's in fact exactly what we need to do. Stephen Colbert said yesterday that the coin should have the Charmin toilet-paper bear embossed on it because obviously the idea came from the government's ass. But that's wrong, too, though a relevant topic. About half of sexual morals is equally simple as fuck--distinguishing between sodomy fuck and sex fuck. Ordinary people who haven't made this observation will be made quite crazy by their own natural defenses, excesively accepting simple answers regarding anything relating to sex or sodomy from a natural sense that the answer is likely simple (as though the answers came from their asses, I suppose Colbert would say). Elitists to keep from going crazy will tend accordingly to view themselves as having broad crazy tendencies to oversimplify things. But actually what elitists have are crazy tendencies to oversimply things that remind them of the sex/sodomy distinction but aren't. And bankers (whom ellitists tend to view as eminently respectable) and platinum proof coins probably don't remind elitists of sodomy or sex, so in fact, they would have little crazy tendency there to prefer simple solutions, whereas their stupidly indiscriminate sophistication might cause elitists to excessively reject solutions there that are simple. Elitists need to see that they only have crazy tendencies to view things as too simple as regards matters that vaguely are like the sex/sodomy distinction, and to stop allowing a false sophistication on their part to discourage themselves from seeing simple truths.

On the other hand, there are some common people, not having possessed or used leisure to analyze the economic situation and lacking understanding, who view things too simply by conflating what is called government debt with private debt, when in fact they are more opposites of each other. And there are other people (Peterson foundation?) who are against government debt because they think if interest rates weren't low, banks and financial institutions insuring or holding debts and mortgages might suffer, and they overestimate the importance of finance, an essentially non-productive sector of the economy, or have selfish stakes.

Seems like a clever move financially speaking and it probably survives judicial scrutiny assuming that the law is applied as written. Still, it's a dumb move politically because it lets the GOP escape accountability and opens the President up to ridicule and invective from regular Americans and not just the 27%.

The feds income per year is around $2.5 trillion. IIRC, the cost to service that debt is less $.5 trillion, so if the fed gov stopped borrowing money tomorrow, it could easily afford to service the debt.

The GOP will use the debt ceiling debate to try to force the dems to do a budget, as required by law. The dems have not done a budget in 4 years, truly execrable and a complete abdication of their duty to the USA. BTW, the constitution says that congress controls the spending, so what the GOP controlled House is doing is entirely appropriate from a constitutional perspective.

From a financial perspective, back in 2011, for the first time in history, S&P downgraded US Treasury debt to below AAA.

The Chinese and other countries are now in the process of gradually of replacing the dollar as the reserve currency for the world. This will have a huge continuing negative impact on our economy.

Keynes wrote:"Lenin is said to have declared that the best way to destroy the capitalist system was todebauch the currency. By a continuing process of inflation, governments can confiscate,secretly and unobserved, an important part of the wealth of their citizens...Lenin was certainly right. There is no subtler, no surer means of overturning the existing basisof society than to debauch the currency. The process engages all the hidden forces ofeconomic law on the side of destruction, and does it in a manner which not one man in amillion is able to diagnose."